Tomorrow, the World Wide Web!;Microsoft, the PC King, Wants to Reign Over the Internet

As a captain of industry and the richest man in America, William H. Gates has often been compared to industrial titans of the past.

And just as the railroad tycoons of the 1800's set the gauge for the nation's railroad tracks, Mr. Gates's Microsoft Corporation seems intent, its critics say, on the modern-day equivalent: controlling many of the basic technical specifications of the global Internet.

The result could be a rapid end to the furious pace of entrepreneurial innovation that has marked the Internet in recent years, critics say, just as hegemony of Microsoft's Windows software has often been blamed for limiting technical innovation in personal computing.

Lately, there has been much publicity for Microsoft's new-found focus on the Internet, starting with a celebrated speech last December in which Mr. Gates said his company would cooperatively "embrace and extend" industrywide Internet technical standards. The public spotlight has focused on new software features and product release dates, as the company tries to catch up with Internet leaders -- like the Netscape Communications Corporation, maker of the Navigator browser for the World Wide Web, and Sun Microsystems Inc., whose Java software is designed to move computing power onto the network from the desktop -- that have been seen as the biggest threat in years to Microsoft.

But while these well-chronicled contests continue, far more meaningful skirmishes are occurring among little-known industry groups that set the arcane -- but crucial -- technical specifications that determine whether and how well various makes and models of hardware and software can work together on the Internet.

On this front, Microsoft may be in the best position to use its market power to influence technology's future. And it is a measure of Microsoft's intensity that one of these struggles has even placed the company at odds with its symbiotic hardware partner, the Intel Corporation.

Rather than merely embrace and extend the Internet, the company's critics now fear, Microsoft intends to engulf it.

Microsoft executives insist that the company intends to cooperate with Internet standards groups. But according to industry executives who have observed Microsoft's activities in these standards sessions, there is evidence that the company is attempting to employ the same sort of business practices that helped it rise to dominance in the personal computing industry -- and that have repeatedly drawn the scrutiny of Federal antitrust investigators.

Just as Microsoft did with PC technology, these executives fear, the company intends to subsume more and more of the Internet's basic technology in Windows.

Indeed, even while it works behind the scenes to shape future technical standards to its competitive advantage, Microsoft has begun to absorb into Windows various Internet capabilities -- like the company's Explorer browser for the World Wide Web and Front Page set of tools for creating Web pages. By offering such products as part of Windows, critics contend, Microsoft could wage an Internet war of attrition against rivals large and small -- whether ascendant powers like Netscape or established tool makers like Adobe Systems Inc., producer of Web-page designing software called Pagemill.

"There are societal consequences to Microsoft's strategy," said Gary Reback, a Silicon Valley lawyer who has battled Microsoft in court and before the Justice Department in recent years on behalf of a number of its competitors. "Here is a new technology and a whole new wave of commerce, and Microsoft wants to suck it in to the operating system to maintain its monopoly."

Microsoft insists that using the Windows vacuum cleaner as a way to suck away revenue from competitors is simply good business.

"Yes, that is our business strategy," said Paul Maritz, the executive vice president for the company's Internet business. "But not out of spite. What you're seeing here is competition, which is good and healthy. Now we have Netscape's Navigator and Sun's Javasoft as our new competitors."

Mr. Reback, though, has been trying to raise alarms with the Justice Department, which last year was intensely investigating the potential antitrust implications of Microsoft's placing an icon for its on-line Microsoft Network on the main screen of Windows 95.

Justice officials decline to comment, but as Microsoft has turned its focus from subscriber-based on-line services to the more open Internet and World Wide Web, the antitrust investigation has reportedly become moribund -- though it is not officially closed.

Not all legal experts, however, see an antitrust threat in Microsoft's Internet activities.

"Maybe it's not a polite way of doing business, but it's not Microsoft's responsibility to be polite," said William F. Baxter, a Stanford law professor who headed the Justice Department's antitrust division for three years in the Reagan Administration.

Still, many companies have grown wary of Microsoft's intentions since it set its sites on the Internet.

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On Dec. 7, the same day that Mr. Gates was delivering his embrace and extend" speech at Microsoft headquarters in Redmond, Wash., a small group of software developers from Intel was meeting in Silicon Valley with Microsoft counterparts. The group was trying to hammer out details of a new technical standard designed to improve and streamline all aspects of computer security and privacy on the Internet, regardless of the brand of hardware or software used.

For five months, Intel had been quietly orchestrating this effort, which had the preliminary support of a group of influential companies that included Netscape and Sun Microsystems. Apple Computer Inc. was also considering coming aboard. But while Microsoft's commitment looked increasingly likely, it was still not certain.

Intel executives were encouraged by the Dec. 7 meeting, however, and they came away hoping to deliver a finished set of specifications at an industry technical conference the next month.

Only a week before the planned announcement, however, Microsoft shocked Intel: not only did the company abruptly pull out of the consortium -- it also said it planned to work against the group's efforts.

Intel executives decline to discuss the matter. But according to several people familiar with the meetings, Microsoft's rapidly evolving Internet strategy now regarded the specifications backed by Intel as a subset of the computer operating system. And the operating system, came the word from Redmond, was something that Microsoft "owned."

The tentative coalition became undone. Without Microsoft's support, the other members drifted away to try their luck with other Internet standards-setting groups. And while Intel would subsequently publish its security plan, the Common Data Security Architecture, on its corporate Web site (http://www.intel.com/iaweb/security/), today it goes largely unread, like a fading billboard on a side road nobody travels any more.

Significantly, late last month Microsoft posted its own version of a very similar document, called the Microsoft Internet Security Framework, on the company's Web site (http://www.microsoft.com/intdev/security/swpintro.htm), as early notification of the security and privacy specifications the company intends to place in future versions of Windows.

Microsoft executives insist that there was nothing duplicitous in the company's withdrawal from the Intel consortium. The company simply concluded that it would be better to pursue standards-setting within the established Internet committees, rather than ad hoc groups like Intel's, Mr. Maritz said.

"The bottom line on this is we decided to work through the Internet Engineering Task Force and World Wide Web Consortium," he said, referring to established Internet standards organizations.

Microsoft is still getting acculturated to these technical circles, which continue to reflect the Internet's roots in the computer-hacker culture of the 1960's and 70's that was based on an ethic of freely shared work.

"The jury is still out on Microsoft's intentions," said Jeffrey Schiller, a computer security expert at the Massachusetts Institute of Technology who is chairman of the Internet Engineering Taskforce's working group on security issues.

But old habits, apparently, die hard. In a separate Internet standards forum, Microsoft earlier this year proposed a proprietary technology the company called Active V.R.M.L., or Virtual Reality Markup Language, to a small Internet group that is setting specifications for virtual reality systems on the Internet.

Mark Pesce, a San Francisco-based computer researcher who was co-inventor of the original version of V.R.M.L. technology, recalled that during the standards meetings Microsoft executives did not appear to be willing to compromise on technology ideas.

"Microsoft was not interested in half and half," Mr. Pesce said. "It was their way or else."

In May, the V.R.M.L. standards committee rejected the Microsoft proposal. But industry executives say the company is now trying to reposition Active V.R.M.L. as a technology for viewing multimedia images on the Web -- an approach that would compete head on with an increasingly popular technology called Shockwave, from Macromedia Inc., a leader in software tools used by multimedia developers.

Microsoft says it is just reacting to a competitive threat. But some legal experts say that if the company's activities have ever warranted Federal antitrust scrutiny, its rapid assault on the Internet would seem to raise many of the same questions.

"The hurdle the Government will have to get over is today they see Netscape with a commanding lead and all the hype around the growth of the Internet," said Garth Saloner, an economist at the Stanford Business School. "What will happen when they see that six or nine months down the road they've been run over, and at that point it is too late?"